Pharma Deals Continue to Boost Global M&A Volumes

The drug deals continue to inject some potency into global M&A this year.

Monday saw two more sizable deals announced.

Shire PLC, a Dublin-based drugmaker that has a top-selling drug to treat attention-deficit hyperactivity disorder, said it would spend $4.2 billion buying upViroPharma Inc., which makes a treatment for a rare hereditary form of tissue swelling called angioedema. Shire said the drug would complement its portfolio because its drug Firazyr treats acute attacks of the disease.

ViroPharma shares were already up 73% this year after spiking 28% in September on a report it had hired bankers for a potential sale. The $50-a-share deal was a 27% premium to where its shares closed on Friday and 64% where they traded prior to September. With Monday’s jump, the stock is up 117% this year to $49.41.

Shire was up 3.4% to $28.90. British investment advisory firm Panmure Gordon said the deal is “transformational” for Shire and while it says the price comes at an “eye-watering” multiple, it makes strategic sense for Shire.

Pharma deals have outpaced the overall market. Thanks to a few major deals this year’s global M&A volume is up 9.3%. Pharma deals, by comparison, are up 38% across the globe through Monday morning and have made up 5% of every dollar spent on M&A, according to Dealogic, the most since 2010.

In the U.S., pharma deals are actually lagging, up only 6.5%, while total M&A is up 20%, according to Dealogic. Still, the pharma sector has made up 5% of all deals there too.

That’s helped drive up values for early-stage treatments and pushed a boom in IPOs for biotechnology companies too. Five of the 11 IPOs scheduled for this week are drug markers or medical device makers, according to Renaissance Capial. They including Relypsa, a late-stage biotech, which is seeking to raise $120 million in its offering, and Celladon Corp, a developer of treatments for heart disease, which is seeking to raise $75 million.